Debbie Acquired a Franchise to Operate a Donut Shop from Dollar

question 35

Multiple Choice

Debbie acquired a franchise to operate a donut shop from Dollar Donuts, Inc., for $100,000. She incurred an additional $4,000 in legal costs to negotiate the terms with the franchiser. In five years, the franchise contract will be renegotiated. The current contract also states that there will be a $3,000 annual fee plus a two percent charge based on the store's annual revenue, which is expected to average 90,000 per year. The franchise cost that should be capitalized is

• A) $ 88,000
• B) $ 92,000
• C) $100,000
• D) $104,000

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Definitions:

Life Expectancy

The average period that an individual is expected to live based on demographic factors like current age, gender, and health conditions.

Social Support

Refers to the physical and emotional comfort given to us by our family, friends, co-workers, and others. It's knowing that we are part of a community of people who love and care for us and value and think well of us.

Type A Personalities

A personality type characterized by competitiveness, high ambition, aggressiveness, impatience, and a fast pace of life.

Mindfulness

The practice of being fully present and engaged in the moment, aware of one’s thoughts and feelings without judgment.